Investing, Emotions, and Choices Article

As Seen In Entrepreneur, Fortune & Bloomberg Businessweek

KANSAS CITY FINANCIAL

R aking in big returns and dodging bigger losses makes for exciting financial headlines. But those rare opportunities aren’t the basis for long-term financial success, according to Scott Colbert, senior vice president for The Commerce Trust Company. He says most people catch the high-risk investment bug when the stock markets are on the rise. It’s his job to help them focus on and ground them in reality. “In the last 15 years, an all- stock portfolio has twice lost 50 percent of its value. When it goes bad, it can go really bad. Are you willing to take that risk?” he says. That’s why Commerce Trust builds wealth and manages portfolios with “Midwestern sensibilities.” “We’re a little less aggressive and a little more conservative,” says Colbert. “When you stick your head out over your skis, you’re likely to fall down. It’s the falling down that can take a long time to recover from, particularly as you get closer to retirement. “We reduce risk at the expense of some upside, but that also means having the confidence to stay the course for the long run.” Investing, Emotions, Choices AND Active vs. Passive Using only fee-based managers and proprietary strategies to avoid commission payments

Scott Colbert

Joe Williams III

We reduce risk at the expense of some upside, but that also means having the confidence to stay the course for the long run.”

and the potential for conflict of interest is one way Commerce Trust stays focused on achieving client goals. Another is the approach of combining both active and passive investing strategies to provide a superior risk-return profile. “We’ve done a lot of work in our quantitative group to analyze the risk and reward investment opportunities,” says Joe Williams III, chief investment strategist. “We assess whether the prospective return on a particular investment is worth the additional fees of an active management approach.” Staying Focused Williams says advising clients who think they’re immune to risk is essential, but assessing an individual or institutional client’s risk tolerance takes time because of how changing markets of active versus passive management for various

affect investors’ exposure. “Our goal is to help take the emotion out of the investment process,” says Williams. “When you’re scared because of the newspaper headlines, that’s when we’re most positive—it’s time to buy. When you’ve had an excess return and you’re over-confident, that’s when we’re going to tell you to reduce your stock.” With the collective experience of more than 400 financial professionals and the knowledge that comes from building proprietary funds, Commerce Trust embodies that sensible and disciplined approach. Commerce Trust has been recognized for its investment performance by industry publications, which underscores that this individualized approach to developing strategies for each client is successful. “And we do it all face-to-face, not through a 1-800 number,” says Williams.

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Mutual funds, annuities, and other investment products: Not FDIC-insured May lose value No bank guarantee

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